eNews from the International Federation of Accountants
1. IFAC Supports G-20 Objectives for Reform of Global Financial System
IFAC supports the proposals issued by the Group of Twenty (G-20) Finance Ministers and Central Bank Governors during the April 2 summit on the world economic crisis in London.
The G-20 objectives are consistent with many of the recommendations that IFAC sent to the G-20 Working Groups prior to the London meeting. These include a call for implementing the Financial Stability Board’s 12 key International Standards and Codes (which include International Standards on Auditing) and strengthening the roles of the International Monetary Fund and the World Bank.
IFAC outlined its recommendations in letters written to three of the G-20 Working Groups, which met at the April 2 summit. The full set of IFAC recommendations can be viewed at www.ifac.org/financial-crisis.
Some of the more significant recommendations include:
The adoption of International Public Sector Accounting Standards (IPSASs) in all jurisdictions; Strengthening of the International Monetary Fund’s Code of Good Practices on Fiscal Transparency through the application of IPSASs; Support for the establishment of well-governed professional accountancy bodies in countries where they do not currently exist; Continued support for the World Bank’s Reports on Observance of Standards and Codes (ROSC) initiative; That the G-20 ensure its actions are supportive of the small business sector; and Establish an international principles-based threshold of competencies for senior financial officers in public interest entities.
IFAC is now developing an additional set of recommendations to build on the proposals described in the G-20 Communique issued during the London summit.
2. 2008 Annual Report Available Online
The IFAC 2008 Annual Report is now available online at www.ifac.org/About/2008-annual-report.php.
The report gives information on IFAC’s Service Delivery for 2008, which includes Standards and Guidance, Promoting Quality, International Collaboration Activities, Representation of the Accountancy Profession in the Public Interest, and Information Services.
The IFAC 2008 Annual Report also features messages from past President Fermin del Valle, Chief Executive Officer Ian Ball, and Public Interest Oversight Board Chairman Stavros Thomadakis. This year, reports are also provided from the Consultative Advisory Groups for the International Accounting Education Standards Board, the International Ethics Standards Board for Accountants, and the International Auditing and Assurance Standards Board.
3. Clarity Project Completed; Clarified ISAs/ISQC 1 Featured on New IAASB Website
The International Auditing and Assurance Standards Board (IAASB) has completed its Clarity Project with the release, in March 2009, of the final seven clarified International Standards on Auditing (ISAs) following the consideration and approval of due process by the Public Interest Oversight Board.
With the Clarity Project’s completion, all 36 ISAs and International Standard on Quality Control (ISQC) 1 have been revised in accordance with the IAASB’s clarity conventions. These revisions will make the standards clearer and easier to understand, implement and translate. The clarified standards go into effect for audits of financial statements for periods beginning on or after December 15, 2009.
To help in the implementation of the new standards, the IAASB has developed an online Clarity Center (http://web.ifac.org/clarity-center/index). The Center provides a full set of the final standards, marked text showing changes from the original standards, a project history, and commonly asked questions and answers. In addition, the IAASB is developing a set of support modules, which will also be accessible from the Clarity Center, that will feature video and slide presentations highlighting key changes in the standards.
4. New IPSASB Handbook for 2009 Released; 2007 Handbook Translated into Spanish
The International Public Sector Accounting Standards Board (IPSASB) has published the 2009 Handbook of International Public Sector Accounting Pronouncements.
The updated handbook contains all pronouncements of the IPSASB as of December 31, 2008, as well as the IFAC Code of Ethics for Professional Accountants issued by the IESBA. It also includes editorial corrections identified since the publication of the 2008 handbook and amendments to the Code of Ethics.
The IPSASB has also published a Spanish-language translation of its 2007 Handbook of International Public Sector Accounting Pronouncements.
This edition contains translations of 24 accrual basis IPSASs and the comprehensive cash basis IPSAS. It revises the translation of the 2005 Handbook, with key changes including three additional IPSASs and revised versions of 11 other IPSASs.
Both handbooks can be downloaded free of charge in PDF format from the IFAC online bookstore (www.ifac.org/store). Print copies are also available for shipment.
5. Agricultural Accounting Addressed in New Exposure Draft
The International Public Sector Accounting Standards Board (IPSASB) has proposed new guidance for the accounting treatment of, and disclosures related to, agricultural activity.
In order to provide clear financial reporting requirements for agricultural activity in the public sector, the board has released for comment the following exposure draft (ED):
ED 36, Agriculture. Comment is requested by June 30, 2009.
This ED is part of the IPSASB’s global convergence program, scheduled for completion by December 31, 2009, that will substantially converge International Public Sector Accounting Standards (IPSASs) with International Financial Reporting Standards (IFRSs) approved at December 31, 2008.
In particular, ED 36 proposes an IPSAS that converges with the International Accounting Standards Board’s International Accounting Standard 41, Agriculture, with limited changes to ensure consistency with other IPSASs.
Other EDs that are part of the IPSASB’s global convergence program include EDs 37-39 (see item 6), which address financial instruments, and EDs 40-41 (see item 7), which provide guidance on intangible assets and entity combinations.
This document, and all of the other EDs, may be viewed by going to www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org or email@example.com.
6. IPSASB Proposes New Requirements on Reporting of Financial Instruments
The IPSASB has proposed new financial reporting requirements to assist public sector entities in accounting for financial instruments such as derivatives, bonds, and loans. Public sector reporting of these instruments has become important due to the unprecedented scale of government intervention in the financial sector.
These new requirements are contained in three new EDs:
ED 37, Financial Instruments: Presentation. Comment is requested by July 31, 2009; ED 38, Financial Instruments: Recognition and Measurement. Comment is requested by July 31, 2009; and ED 39, Financial Instruments: Disclosures. Comment is requested by July 31, 2009.
The three EDs propose IPSASs that converge with the International Accounting Standards Board’s standards for financial instruments as at Dec. 31, 2008 with limited changes.
The EDs may be viewed by going to www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org or firstname.lastname@example.org.
7. New Guidance Will Strengthen Reporting of Intangible Assets and Entity Combinations
The IPSASB has proposed new guidance to address the accounting for intangible assets and entity combinations. Both subject areas are growing increasingly important for public sector entities as the financial crisis forces more governments to acquire businesses that would otherwise have been liquidated.
To ensure that these transactions are reported in a consistent and transparent manner, the IPSASB has released for comment the following exposure drafts (EDs):
ED 40, Intangible Assets. Comment is requested by Aug. 15, 2009; and ED 41, Entity Combinations from Exchange Transactions. Comment is requested by Aug. 15, 2009.
ED 40 proposes an IPSAS that converges with the International Accounting Standards Board’s (IASB) International Accounting Standard 38, Intangible Assets. It also incorporates guidance on website costs and intangible heritage assets. Meanwhile, ED 41 is converged with the IASBs International Financial Reporting Standard 3, Business Combinations because it addressed entity combinations that are similar in nature to those in the private sector.
The EDs may be viewed by going to www.ifac.org/EDs. Comments may be submitted by email to EDComments@ifac.org or email@example.com.
8. Quality Control Implementation Guide for SMPs Now Available
To further help small and medium practices (SMPs) implement international standards, IFAC has published a Guide to Quality Control for Use by Small- and Medium-sized Practices. The guide is designed to help SMPs understand and efficiently apply International Standard on Quality Control (ISQC) 1, Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services, as redrafted under the IAASB’s Clarity Project.
The guide was developed by CGA-Canada for IFAC’s Small and Medium Practices (SMP) Committee, and uses an integrated case study to illustrate how to implement the requirements of ISQC 1. It includes two sample firm policy manuals and key checklists and forms.
It can be downloaded free of charge from IFAC’s online bookstore at www.ifac.org/Store/. A Microsoft Word version is available to allow for translation and adaptation by institutes and small firms.
9. New Guidance Focuses on Development of Accounting Technicians
The Developing Nations Committee has released a new good practice guide entitled, The Education, Training and Development of Accounting Technicians. It is designed to raise awareness of the role and value of accounting technicians in both the public and private sectors.
The guide promotes the importance of having accounting technician-level programs in both developed and developing economies so that individuals have access to education and training. The guide also encourages professional accountancy organizations to support the development of accounting technicians by offering technician programs that lead to certification and membership in the organization.
The guide can be downloaded free of charge from the IFAC online bookstore (www.ifac.org/store). For more information on IFAC’s work to support developing nations, visit www.ifac.org/developingnations.
10. Drafting Conventions to Improve Clarity of IESs Proposed
The International Accounting Education Standards Board (IAESB) has released exposure draft (ED), Explanatory Memorandum on IAESB Drafting Conventions, which outlines a new drafting style designed to improve the clarity of International Education Standards (IESs).
Key elements of this new style include:
Basing the standards on objectives, as opposed to procedural considerations; Use of the word “shall” to identify requirements that IFAC member bodies are expected to follow; Eliminating the present tense to describe actions by an IFAC member body, which some had regarded as ambiguous in terms of obligation; and Structural improvements to enhance the overall readability and understandability of the standards.
Comments on this ED are requested by May 29, 2009. It can be downloaded at www.ifac.org/EDs.
11. Noteworthy Articles on PAIBs, Governance, Risk, and Leadership Published
IFAC has published the 2008 Articles of Merit, which includes 11 previously published articles that were selected by the Professional Accountants in Business (PAIB) Committee as part of its annual Articles of Merit Award Program for Distinguished Contribution to the roles and domain of professional accountants in business.
The winning article for 2008 is “Black Holes in Accounting” by Ron Lutka. It was first published in the CMA Canada’s monthly members’ magazine CMA Management. It focuses on the issue of locating and eradicating undesirable activities that negatively impact the performance of an organization. It also provides advice on understanding the root causes of such problems. Other noteworthy articles include “Financial Leadership: What’s It All About?” by Jeffrey C. Thomson and “Ignore Strategic Risk at Your Peril” by Gillian Lees.
The 2008 Articles of Merit, together with past issues, can be downloaded free of charge from the IFAC online bookstore (www.ifac.org/store). The 11 articles in the 2008 publication can also be downloaded individually from the IFAC bookstore.
12. Guidance Issued for Enhancing Corporate Governance
The Professional Accountants in Business (PAIB) Committee has released a new International Good Practice Guidance document, titled Evaluating and Improving Governance in Organizations, to help professional accountants in business enhance governance and improve organizational performance.
The document includes a framework, a series of fundamental principles, supporting guidance, and references on how PAIBs can contribute to evaluating and improving governance in organizations.
The guidance encourages organizations to achieve a balance between conformance with regulations and driving organizational performance. It was designed to complement existing governance codes, such as the OECD Principles of Corporate Governance (2004) issued by the Organization for Economic Co-operation and Development (OECD).
The PAIB Committee has also issued a separate document, Preface to IFAC’s International Good Practice Guidance, which sets out the scope, purpose, and due process of the committee’s International Good Practice Guidance series.
Both Evaluating and Improving Governance in Organizations and the Preface to IFAC’s International Good Practice Guidance can be downloaded free of charge from the PAIB section of the IFAC online bookstore at www.ifac.org/store.
13. Sustainability Framework Generates Record Web Traffic
The IFAC online Sustainability Framework, developed by the Professional Accountants in Business Committee, has generated nearly 33,000 page views since its launch in February.
The Framework was developed to help professional accountants and their organizations integrate sustainable ways of thinking into all of their business processes.
The web-based tool is designed with four perspectives-business strategy, internal management, financial investors, and other stakeholders-that allow users to easily navigate the sustainability issues, and related resources, most important to their immediate roles.
The Sustainability Framework can be accessed free of charge from the International Center for Professional Accountants in Business section of the IFAC website at www.ifac.org/PAIB.
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